I know a lot of projects use Mercurial on Windows as well, I'm not aware of any big problems with it.
I trust that indeed, there are no big problems for most users. I also trust that the hg developers are, in general, open to incorporating improvements on Windows.
I'm still skeptical though whether Mercurial is really usable on Windows. Your statement is a somewhat self-fulfilling prophecy: people who run into big problems early likely aren't going to use it. So lack of reports doesn't really mean there aren't any problems.
FWIW, I tried to check out Mozilla (which is in hg), and the check out would always abort with a timeout. Then I downloaded a bundle that they had produced, and try to unbundle it. It took all night, but was complete the other morning. Trying to update the checkout would again make me run into http timeouts. I tried the same on Linux, and it completed within a few minutes. So I conclude that, from a certain project size on, hg is unusable on Windows, atleast on my office machine, running Windows 7.
That sounds pretty bad. By check out, do you mean the clone (getting data over the wire) or the actual check out (setting up a working directory)?
Creating the clone. ISTM that it leaves the http connection open while doing stuff locally (or creates multiple of them, and one times out).
It starts cloning, and then, after an hour or so, it reports ABORT, and rolls back, for no apparent reason.
I think I've heard of problems with the clone part before, for them. We're actually working on improving clone size, though it also seems to have to do with network reliability.
Our institute has generally a really good internet connection; I think hg.mozilla.org does as well. Plus, it worked when doing it on the very same machine on Linux.